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Export Economies in Latin America
By the end of the 20th century, the majority of Latin America had been freed from European dominance and begun developing independently. The success of these nations depended heavily on economic security, with a negative correlation between the wealth of a colony and the stability of a nation. For example, Haiti, one of the wealthiest colonies due to its production of cane sugar, became one of the poorest nations upon independence. Bolivia, a wealthy colony due in part to the Potosí mine, suffered a similar fate. One main reason for this is that the role of these nations, originally colonized by Spain, was primarily resource based exportation, or monocultures, leading to poor economies and governmental systems reliant of European subsidization. The United States, however, felt the opposite of this negative correlation. Whereas the U.S. was a relatively poor colony, it enjoyed economic stability upon independence when compared to nearby colonies. One reason for this was that the U.S., unlike other colonies ruled by Spain, France or other European nations, was ruled by Great Britain. Britain believed in creating colonies that could serve as peripheral states to the mother land, therefore leading to the U.S. being prepared as a potential new home for English citizens. Because of this, the United States as a colony already had a fully developed economy and governmental system sustainable without European influences. Neocolonialism and Export Economies Due to its stability, the United States developed quickly as an independent nation and became a regional super power while its Latin American cohorts struggled to find economic footing. Early in the 20th century, the United States began embarking in aggressive economic strategies in Latin America that many scholars considered to be Neocolonialism, or, the use of economic pressure and capitalism to control an economically weaker nation. It is important to note that Neocolonialism is distinct from colonialism in that colonialism requires ideological (Christian evangelism), physical (powerful European militaries) and economic (European capitals control a formal imperial system) control, whereas Neocolonialism is imperialism on a primarily economic level (Dawkins). This practice became extremely successful, largely due to the export-dependent economies residing from colonial times. When a nation’s economy is dependent on one product for the majority of revenue (bananas, coffee, ect), these exports tend to have virtually no local outlets. Therefore, the products require an international buyer, who has the ability to control the price of the goods as well as the price of the imports the “export nation” requires to replace domestic production. Since export nations typically have little stake or influence in international market prices, these exploitation practices soon becomes permanent. Effect of Neocolonialism on Developing Nations Neocolonialism efficiently keeps developing nations in a stagnant state of growth by laying heavy taxes and control on all aspects of the developing nation’s economy. Furthermore, the distortion of the economy externally is reflected on the internal economy through an increase in social stratification. It develops a small but powerful upper class of bureaucratic prestige, which is able to exploit the numerous but stifled lower/working classes. Neocolonialism weighs heavily on political structures as well, as international corporations rely on their domestic nations for support. This can be seen when, on June 25th 1954, a small rebel force led by Coronel Carlos Castillo Armas and trained/equipped by the CIA, overthrew Guatemalan president Jacobo Arbenz Guzmán because of his constraint of the United Fruit Corporation , based in the United States (Dawkins).